The Indonesia land legislation is based on The Basic Agrarian law number 5 of 1960. This law does not recognize the concept of freehold land right. Instead, the various right attached to land are decided into separate elements which are subjects to separate titles. The Basic Agrarian Law recognizes several types of right on land. To the foreigner, the following three main rights are significant, i.e.:

1.		The Rights of Exploitation (Hak Guna Usaha - HGU)
		The right of expoitation is the right to use the state owned land for agriculture in a broad sense, including plantation, fishing and cattle raising. The title which is normally granted for 35 years, but may be extended maximally for 25 years. This right can be held by Indonesian individuals/entities as well as government approved Foreign Investment (PMA) companies. The certificate can be mortgaged.
2.		The Rights of Building (Hak Guna Bangunan - HGB)
		The right of building (HGB) is the right of land to construct  and built building on. Usually it is given for 20 to 30 years and can be renewed on consideration of policy of the regional government. This right can be sold, exchanged, transferred, and mortgaged, and can be held directly by any corporate entity whether it is a local company or a government approved Foreign Investment (PMA) company.
3.		The Right of Use (Hak Pakai)
		This is the right to use State-owned or other land by public or private persons or entities for a specific purpose for a definite period or occasionally for an indefinite period. This land right cannot be sold, exchanged or transferred unless explicitly provided in its grant or agreement and normally for a period not exceeding 10 years. This right may be held by an Indonesian individual or entity or foreigner permanently domiciled in Indonesia, or a foreign legal entity with a representative office in Indonesia such as foreign banks, embassies, etc.

These right all authorize the use of land, the differences lie in the the duration of validity, the nature of utilization and the opportunities for obtaining a mortgage law.

Up to now foreigners can't own land/property in Bali or anywhere else in Indonesia! These laws might be changed soon, but until now no details have been released, foreigners will not be able to own "freehold" property (Hak Milik) but only a "Hak Pakai" title valid for 25 years with another 25 years extension. However, in future it will be possible to transfer, sell, and mortgage a "Hak Pakai".

To solve this problem in most cases an Indonesian citizen will hold the interest in the property as the nominee and on
behalf of a foreigner, and the title or rental/lease contract will be made out in the Indonesian's name. Whilst such arrangements are not strictly against the law, they are contrary to current government policy and the spirit of the law.

If an Indonesian acts as nominee for a foreign investor there are a number of contracts and other documents which must be prepared by and signed in front of a qualified notary. These include the Purchase or Rental Contract for the property transferring the rights from the previous owner to the nominee; a Loan Agreement for the purchase/rental price between the investor and the nominee; and an irrevocable and transferable Power of Attorney to sell, transfer or otherwise dispose of the property and to represent the nominee in any dispute regarding the property, given from the nominee to the investor. The nominee will also be asked to hand over all original land titles to the foreign investor.

Although most foreigners have found the above arrangement to work satisfactory without any problems (as long as all agreements have been properly executed in front of a qualified notary), some buyers prefer to have their property owned by a PMA (Penanaman Modal Asing/Foreign Investment) Company directly controlled by the foreign investor. Since the investment deregulation package issued on May 19th, 1994 (Government Regulation No. PP-20/1994), a PMA Company can be 100% foreign owned (see investment info section).

access bali villas
a private piece of paradise